Callahan & Blaine

Drug overdoses cause more deaths in America than either car accidents or guns. The opioid crisis has destroyed lives and devastated families. It is the deadliest drug crisis in United States history and it is only getting worse. In 2016 alone, California lost 1,925 lives to the opioid epidemic. Meanwhile in 2016, HealthNet implemented a plan to deprive thousands of policyholders and their dependent children suffering with drug addiction and alcoholism from getting the care they needed to survive. The California Department of Insurance (CDI), along with a number of policyholders and health care providers in pending litigation, want to hold HealthNet accountable for its unfair insurance practices.

On July 24, 2018, the CDI served HealthNet with an Order to Show Cause and Notice of Noncompliance (OSC) after receiving hundreds of complaints from substance use disorder providers that alleged HealthNet had either denied claims or grossly underpaid claims for treatment rendered in late 2015 and 2016. The CDI concluded that in January 2016, HealthNet began accusing substance use disorder providers of insurance fraud and referred their claims to its Special Investigations Unit (SIU) before even performing a reasonable review of the claims. The claims were held in a “pending” status while the health care providers were forced to submit extensive documentation and comply with unreasonable requests for information, resulting in illegitimate denials and delayed payment of claims for pre-authorized and covered treatment. (CDI File No. UPA-2016-00005)

For those providers who were able to be cleared from the SIU, their claims were paid at a fraction of the amount owed under the HealthNet PPO policies. The CDI noted that the HealthNet PPO policy language in 2015/2016 required payment at 75% of the provider’s billed rate, but that HealthNet was paying the providers “a bundled per diem Medicare rate for an entirely different service furnished by an entirely different type of facility.” The OSC states that HealthNet has engaged in unfair and deceptive insurance practices under California Insurance Code section 790.03, and failed to comply with the Federal Mental Health Parity and Addiction Equity Act of 2008, and seeks the imposition of monetary penalties of up to $10,000 for each willful act of unfair competition, potential amounting to hundreds of millions of dollars.

Attorneys Rich Collins and Damon Eisenbrey of Callahan & Blaine in Orange County, California were elated to receive a copy of the OSC shortly before they appeared in court on one of the many cases they have filed against HealthNet. “We’ve been aggressively litigating these very issues for almost two years and less than two hours before we head into court, we receive a copy of the OSC confirming our contention that HealthNet engaged in massive unfair and deceptive insurance practices in violation of state and federal law, and its own policies,” recounted Eisenbrey. Collins and Eisenbrey have filed two class action lawsuits* against HealthNet and represent over a dozen health care providers in litigation arising out of HealthNet’s refusal to honor the terms of its PPO policies and pay for substance use disorder services rendered to thousands of HealthNet policyholders.

The OSC confirms the CDI’s commitment to protecting consumers, health care providers and the public against unfair and deceptive insurance practices. “It’s unfortunate, however, that some substance use treatment providers, who are in the business of saving lives, have had to close their doors because HealthNet refused to pay the claims.” “More despicable,” Collins continued, “is that HealthNet carried out its bad faith denials in the midst of a drug epidemic, knowing that patients in need of care were being discharged, some of them overdosing and dying on the streets, just because HealthNet refused to pay the claims.”

*Steinley v. Health Net, United States District Court Case No. 2:18-cv-05458-R-SK
*Mitchell v. Health Net, United States District Court Case No. 2:18-cv-05499-R-SK

For more information, contact:
Laurali Kobal, Firm Administrator, 714-241-4444, Laurali@callahan-law.com

ABOUT RICHARD T. COLLINS: Mr. Collins is known for being an aggressive trial attorney who has been named to the list of Super Lawyers each year since 2015. Rich has been lead counsel in over 25 jury and court trials in federal and state courts throughout California and elsewhere. He is a litigator with extensive experience in the areas of insurance recovery, coverage and bad faith, and has recovered millions of dollars for his policyholder and health care provider clients through verdicts and settlements. 714-241- 4444, rcollins@callahan-law.com

ABOUT DAMON D. EISENBREY: Mr. Eisenbrey is a Senior Attorney at Callahan & Blaine. He has extensive experience in complex business litigation involving unfair methods of competition and unfair and deceptive business acts or practices. Mr. Eisenbrey also represents insurance policyholders and health care providers in individual and class action insurance recovery, coverage and bad faith matters, and he prosecutes and defends cases in state and federal court. 714-241-4444; deisenbrey@callahan- law.com.

ABOUT CALLAHAN & BLAINE: Founded in 1984, Callahan & Blaine is California’s Premier Litigation Firm with record-breaking verdicts and settlements in all areas of complex litigation. With a current roster of more than 28 trial lawyers experienced and focused in virtually all civil practice areas, Callahan & Blaine offers civil litigants an impressive set of credentials and client service values. Our attorneys have more than 700 years of trial experience, and since 2003, our verdicts and settlements add up to over $1.0 billion. Our law firm represents consumers and corporate, professional and entrepreneurial clients of all sizes.